What’s the difference between your credit score and your credit report?

Credit scores vs. credit reports

Professional words, terms and phrases can sometimes be very confusing and terrifying. When trying to understand how to improve and maintain your credit score the last thing you need is the confusion of words you don’t know.

Many financial institutions, be they banks or other lending institutions, need the assurance that you will pay them back what you owe them. You can help build that credibility by taking some simple steps to look after your credit rating on a daily basis.

Do you know about your credit rating? Knowing the difference between your credit rating and your credit score is of the utmost importance in securing credit. It’s natural that people confuse the two - both are records on how you have handled credit in the past, after all - but they are subtly different. Your rating will tell you if creditors are more likely to offer you credit, while your report reveals exactly what you have had approved in the past.

What is a credit score?

Your credit score is a tool that's used to determine if you're a potential borrower in getting the type of loan products you need. When a possible lender wants to look at your financial situation, it can do so by using software applications which will give them access to your credit file, which contains any and all information about all of your financially-related dealings.

What is a credit report?

Your credit report contains information regarding the fact that you were due to pay money that you borrowed. Let's go over some pointers so as to familiarise ourselves with what a credit report is actually all about. Your credit report, as a matter of fact, consists mainly of details related to your lenders and loans. The report also includes your balance statements, payment patterns and it's all dictated by your lender accounts - both those belonging to yourself as well as those belonging to others who have applied for loans using your name as their reference number.

Where do the two differ?

Credit reports provide much more detail than your credit score alone. There are no indications given for what contributed to your credit score and why, but a credit report can really give you a good idea of where your financial history is headed in the future after examining all the details in one place.

There is a lot of confusion out there about credit scores and credit ratings. While both credit scores and credit ratings are important and play a large role in your financial life, you should understand the difference between them and how to improve your credit score and credit rating.